Egyptian Shares Head for 2-Week Low as Army Calls for Protests

Egypt’s benchmark stock index headed for the lowest close in two weeks after the country’s army chief urged the public to protest, spurring concern that unrest since former President Mohamed Mursi was toppled could escalate.

The EGX 30 Index fell 1.2 percent to 5,292.96, set for the weakest level since July 11, at 11:35 a.m. in Cairo as 25 stocks declined. Orascom Construction Industries led the retreat, decreasing the most in a month. Stocks valued at 70 million pounds ($10 million) traded, compared with a daily average over the past year of 392 million pounds, according to data compiled by Bloomberg.

Stocks extended declines into a second day after Defense Minister and Deputy Prime Minister Abdelfatah al-Seesi called on all “honorable” Egyptians to rally tomorrow to back the army as it seeks to combat “terrorism.” Supporters of Mursi and his Muslim Brotherhood have held daily protests since the army’s July 3 intervention, demanding his reinstatement and frequently clashing with opponents and security forces.

“We are in a very critical situation now, no one can expect what will happen tomorrow and how the day will end,” Margo Moussa, head of research at Cairo-based Arab Finance Brokerage, said by phone. “If violence spreads and escalates that would be very negative.”

Orascom Construction fell 2.1 percent, the most since June 23, to 245 pounds. The yield on the government’s benchmark $1 billion of 5.75 percent bonds maturing in 2020, which plunged more than 200 basis points in the weeks after Mursi’s removal by the military, has climbed 11 basis points this week to 8.56 percent, data compiled by Bloomberg show.

Political Divide

Moody’s Investors Service maintained its negative outlook on Egypt’s debt yesterday and affirmed a rating of Caa1, its fifth-lowest junk score, saying the country faces a deepening political divide after Mursi’s ouster.

The Brotherhood has called Mursi’s removal a coup against Egypt’s first freely elected civilian president. The group has also planned mass rallies for tomorrow, and Essam El-Erian, vice-chairman of the Brotherhood’s Freedom and Justice Party, said al-Seesi’s call was a “threat to plunge the country into seas of blood” to which Egyptians would not respond.

The ultraconservative Nour Party, the only Islamist group that supported Mursi’s ouster, said that rival street protests could lead to a civil war. Egypt’s credit default swaps, contracts insuring the nation’s debt against default, have risen 14 basis points this week to 763, after increasing 93 basis points last week.

To contact the reporter on this story: Tamim Elyan in Cairo at telyan@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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